No. 117 - 15 June 2006

Walking the Talk?

If you still aren’t convinced that the Executive and Legislative branches of government are so preoccupied with other matters, look no further than their performance vis-à-vis their own list of legislative priorities as outlined in the LEDAC (Legislative-Executive Development Advisory Council) meeting of 16 May. At that meeting, the President, Cabinet, and Congress agreed to focus on acting on nine key measures as well as the Constitutional amendments via Constituent Assembly before Congress adjourned on 9 June. Among the key measures was the 2006 national budget, still to be approved although half the year has passed.

By the time 9 June rolled around, just one bill was passed and it wasn’t on the original list of priorities. The death penalty was repealed, just in time for a planned official visit to the Vatican. The budget remained pending while the Constitutional amendments simply focused on political changes and completely ignored economic provisions.

Here’s a look at the LEDAC’s priority list of last May:

1. 2006 General Appropriations Act (HB 4710, A3R)
The House approved a P1.053-trillion budget for 2006 last 5 April 2006. The proposed budget gives the biggest share to the departments of Education (P108.7 billion), Public Works (P54.2 billion), National Defense (P46.5 billion), Interior and Local Government (P45.4 billion), Transportation and Communications (P13.5 billion), and Health (P10.1 billion).

Reporting out its version on 22 May, the Senate proposed an increase of P4.43 billion and a decrease of P35.54 billion, constituting a net cut of P31.11 billion from the House version. Among the proposed reductions are the deletion of several projects, including the Kilos Asenso Support Fund (P3 billion); Kalayaan Barangay Program Fund (P3.69 billion); Compensation Adjustment Fund (P13.1 billion); and the incentive package for employees availing the Rationalization Program (P10 billion) under the Pension and Gratuity Fund. Senators also agreed to scrap the entire budget of the Presidential Commission on Good Government amounting to P65.53 million.

The Senate revised on 2 June its earlier version for a total cut of P64 billion (P26.3 billion from programmed appropriations and P37.7 billion from unprogrammed funds). Voting 17-0, senators approved a P1.027 trillion budget for 2006, which the president and her congressmen allies refused to accept.

2. Anti-Terrorism Act (HB 4839, A3R / SB 2137, P2R)
The main concern about the anti-terrorism law is the threat to people’s rights and the freedom of speech. Terrorism, as defined, is committed “through premeditated, threatened, or actual use of violence or force” with the intent of “sowing a state of danger, panic, fear or chaos.” Offenders can be punished with life imprisonment. Failure to disclose information on any acts of terrorism is also punishable. Suspects arrested for custodial investigation can be detained for three days.

3. Bio-Fuels Act (HB 4629, A3R / SB 2226, P2R)
The measure mandates the blending of bio-ethanol with gasoline as motor fuel. It also mandates the Department of Energy to phase out the use of harmful gasoline additives and oxygenates within three years. A minimum of 5% bio-ethanol fuel should be blended within two years (10% blend within four years) from the law’s approval. Fiscal and non-fiscal incentives can be provided to private entities who will be involved in the production of bio-ethanol.

4. Tax relief for low-income earners (HB 5296, A3R / SBs 5, 74, 794, 1335, 1336, 1917 and 2210, PIC)
HB 5296 proposes to exempt minimum wage earners from income tax and to lower the income tax of low middle income earners. Personal exemptions will increase by 50% while a 40% optional standard deduction for professionals and self-employed will replace expenses/deductions. Basic personal exemptions will be P30,000 for single individuals, P37,000 for head of family, P48,000 for each married individual, and additional P12,000 for each dependent not exceeding four. The Senate versions are still subject to public hearings.

5. Rationalization of fiscal incentives (HB 3295, A3R / SBs 513, 1104, 798, 1328, 1332 and 1839, PIC)
HB 3295 seeks to consolidate the Investments and Incentives Code, making it simpler to administer. Under this bill, fiscal incentives shall be terminated after a cumulative period of 20 years from start of commercial operation. A seven-man Board of Governors at the Board of Investments will be created to regulate investments and monitor Investment Promotion Agencies. It can recommend to the President the restriction of imported goods covered by rationalization programs. Counter-part bills are still pending in the Senate.

6. Bases Conversion Development Authority ecozone incentives (HBs 4900, 5064, A3R / SBs 2010, 2098, and Joint Res. No. 7, PIC)
The measure seeks to amend RA 7227 (Bases Conversion and Development Act of 1992). On 24 October 2003, the Supreme Court declared unconstitutional tax and duty incentives granted to the investor-locators in Camp John Hay. On 29 July 2005, the Court excluded investors in Camp John Hay, Clark, Morong in Bataan, and Poro Point in La Union from incentives provided under RA 7227. On 10 March 2006, President Arroyo issued Proclamation 1035, which entitles Clark locators to 5% tax instead of higher national and local taxes as well as tax and duty-free importation on capital equipment under RA 7916 (Special Economic Zone Act of 1995).

HB 4900 seeks to grant tax amnesty covering the deficiency taxes and duties incurred by investors in special economic and free port zones. HB 5064 and SB 2098 propose the inclusion of Clark Special Economic Zone, Poro Point Special Economic and Freeport Zone, John Hay Special Economic Zone, and Morong Special Economic Zone as tax and duty–free zones like Subic.

7. Anti-Smuggling Act (HB 4069, A3R / SBs 453, 455, 1058, 1969, 1976, and 2154, PIC)
It is estimated that more than P85 billion annually is lost to smuggling. This measure aims to minimize the losses to help cure the government’s fiscal deficit. It provides heavier penalties in fines and imprisonment for outright and technical smuggling. It also provides for private sector participation in the deliberation on valuation issues. A “Special Body Against Smuggling” shall be created composed of heads of relevant government enforcement agencies as well as representatives from the private sector to be appointed by the President.

8. Tourism Policy Act (HBs 298, 942, 1207, 1363, 2257, and 2625, PIC / SB 2138, P2R)
This measure reorganizes and rationalizes the Department of Tourism and its attached agencies to implement a national tourism policy. It seeks to create a Tourism Enterprise Zone Authority (TEZA), which can provide incentives for investors. In place of all national and local taxes and fees, except real estate taxes, a new enterprise shall pay a tax equivalent to 3% of its gross income. A registered enterprise is entitled to tax exemption on importation of capital equipment. Subject to the TEZA Board’s approval, employment of foreign nationals may be allowed provided there is a Special Investor’s Resident Visa and an investment of at least US$50,000. Repatriation of investments and remittance of earnings from a foreign investment will be computed in the currency in which the investment was originally made and at the exchange rate prevailing at the time of repatriation or remittance.

9. Amending provisions of the Automated Election System Law (HB 5352, A3R / SB 2231, P2R)
The next election is scheduled on 14 May 2007. Despite the assurance of COMELEC to be automated by then, experts claim that an automated election system requires about two years of testing to make sure it works as expected.

The measure seeks amendments to RA 8436 (Authorizing the Comelec to use an automated election system in the May 11, 1998 national or local elections and in subsequent national or local electoral exercises), allowing the “use of appropriate and available technology in voting, counting and canvassing, and transmitting of results to reveal the outcome in the shortest time possible.” It proposes full automation by 2010 with an initial implementation by 2007 in Metro Manila, Autonomous Region in Muslim Mindanao, and in three regions with the largest number of voters.

On 13 January 2004, the Supreme Court nullified COMELEC Resolution 6074 awarding the project to Mega Pacific Consortium; declared null and void the contract between COMELEC and the Mega Pacific eSolution Inc.; and ordered the Commission to refrain from implementing any other contract with regard to the project. Last 12 December 2005, Senate Committee Report 44 found Comelec Commissioners and its Bids and Awards Committee officials liable for the conduct of the anomalous and onerous bidding. It recommended that the officials vacate their posts. The government paid P1.05 billion to the Mega Pacific Consortium for the computerization of the election, yet the COMELEC was unable to make use of the automated counting machines.

10. Concurrent Resolution Convening Congress to Propose Constitutional Amendments/Revisions (HCR 26, A2R)
The House has been pushing for a Constituent Assembly and even wanting to test the idea of voting as a whole (excluding the Senate) to meet the ¾ votes requirement to amend the Constitution.

The Senate, however, adopted on 21 March 2006 Resolution No. 75 which said that any proposed amendment or revision of the Constitution must be approved by the Senate and House, voting separately. Under a bicameral legislature system, they always vote separately on bills and resolutions. The resolution was signed by Senators Drilon, Flavier, Pangilinan, Pimentel, Roxas, Cayetano, Ejercito Estrada (L.), Biazon, Ejercito Estrada (J.), Gordon, Arroyo, Angara, Madrigal, Lim, Defensor Santiago, Lapid, Lacson, Osmeña, Villar, and Recto.

The Senators also adopted Resolution No. 77 to declare People’s Initiative illegal. Only Senators Angara and Lapid did not sign the resolution. The anti-Charter change group “People’s March Against Charter Change” has blocked the people’s initiative being pushed by the Sigaw ng Bayan. Ten petitions in various lower courts are pending in the areas of Quezon City, Manila, Makati City, Bacolod, Roxas City, Caloocan City, Cagayan de Oro, and Pasig City.